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Dave Inc. DAVE stock has shown remarkable growth over the past year. The stock has skyrocketed 147.3%, outperforming the industry's 12.9% rally and the Zacks S&P 500 composite's 9.6% growth.
DAVE’s performance is significantly higher than that of its industry peers, Byrna Technologies Inc. BYRN and UiPath PATH. BYRN has gained 58.7%, while PATH has declined 44.7% over the past year.
One-Year Price Performance
Image Source: Zacks Investment Research
Dave has also outperformed its industry, Byrna Technologies and UiPath in the past six months. DAVE shares have gained 95.9% against the industry and UiPath’s 3.7% and 17.1% declines, respectively. Meanwhile, Byrna Technologies has risen 33.2%.
In the last trading session, the stock closed at $83.84, 49% down from the 52-week high of $125.00.
Investors might be inclined to buy Dave’s shares, given the rise over the past year. Hereunder, we analyze the stock’s performance and recommend whether investors should buy the stock or stay away from it.
AI-Led Enhanced Credit Performance Benefits Dave
In the fourth quarter of 2024, the company witnessed a decline in credit risk and potential losses amid increasing demand. With a 44% year-over-year increase in originations, DAVE clocked a 53-basis-point improvement in the 28-day delinquency rate. The results can be attributed to CashAI, Dave’s proprietary AI underwriting model, which improved the ability to assess credit risks as it has analyzed more than 125 million ExtraCash originations.
The real-time assessment of bank account transaction data facilitated by CashAI outpaces FICO-based credit decisions that rely on bureau data. The combination of AI and real-time information enables DAVE to lead credit assessments efficiently, such that it lowers credit risk and reduces losses.
DAVE’s Optimistic Margin Expansion
In the fourth quarter of 2024, Dave’s top line grew 38% year over year, driven by an increase in the transacting member base, unlocked via enhancements to MTM retention and effective acquisition of new customers. Revenue growth can also be attributed to higher approval limits of ExtraCash, and growth in Dave Card MTMs and Dave Card spend.
In addition to top-line growth, the variable margin increased 15% year over year in the fourth quarter of 2024. The reasons are a lower proportion of expenses to revenues due to improvements in credit performance led by Cash AI. The percentage of fixed expenses declined 800 basis points (bps) year over year in the fourth quarter of 2024. This can be attributed to prudent headcount management and cost rationalization initiatives.